Chapter 1 Should You Become an...

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About the AuthorCynthia L. Greene taught busi-ness education at the high schoollevel for 25 years. She taught inthe Fulton County School Systemat Centennial High School inRoswell, Georgia, where she was aCooperative Business EducationCoordinator and chair of thebusiness and career technologydepartment. She has been activein the National Business Educa-tion Association (NBEA), servingon the Entrepreneurship Stan-dards Committee and as a writerfor the Entrepreneurship LessonPlans. Cynthia is president-electof NBEA.

ENTREPRENEURSHIP: IDEAS IN ACTION 3Eby Cynthia L. Greene

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CHAPTER

1 1.1 Entrepreneurs: Present and Past

1.2 Is EntrepreneurshipRight For You?

1.3 Identify BusinessOpportunities and Set Goals

Should You Become an Entrepreneur?

2

Should You Become an Entrepreneur?

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MAKING JOB CONNECTIONS

I d e a s i nA c t i o n

W h a t d o y o u k n o w? 1. Who do you think was one of the most important entrepreneurs ofthe past?

2. Who do you think is one of the most important entrepreneurs of thetwenty-first century?

3. Can you identify a need in your school or community that might bemet by the creation of a new business?

3

The foundation of the U.S. econ-omy is entrepreneurship. Today’s

large corporations were yesterday’ssmall businesses. Identifying a needand coming up with a product or ser-vice to meet it are what entrepre-neurship is all about. Some famousentrepreneurs in history include LeviStrauss and Olive Ann Beech. Twenty-first-century entrepreneurs includeBill Gates and Oprah Winfrey. You orsomeone you know could be a futuresuccessful entrepreneur. Prepareyourself to turn ideas into action andseize the opportunity when it comes!

As president of the Future Busi-ness Leaders of America, Mike Stahlcame across an idea for a businesswhile coordinating a job fair for theBlue Valley School District in KansasCity, Missouri. He heard fellow stu-dents complain about not knowingwhere to look for jobs, and he heardemployers express a need for quali-fied help. This inspired Mike to comeup with the idea for 4Teens Network,LLC, which he now runs with hispartner, Ephren Taylor, Jr. Throughan interactive web site featuring em-ployer advertisements and registered

job seekers, 4Teens Network wouldmatch employers and employees.

Seeing this opportunity’s poten-tial, Mike and Ephren tested thebusiness model, including variousweb site designs, sales and marketingplans, and pricing structures, beforeseeking outside financing. In the firstfive months of testing, the companyreturned 300 percent on its initial in-vestment. This gain showed Mike,Ephren, and potential investors thatthis venture had great possibilities.The time and energy spent in plan-ning and testing their business modelhelped prepare 4Teens Network, LLC,for a successful future.

The web site asks job seekers aset of questions and uses answers tobuild a professional resume, whichcan be sent to job listings on the site.Users can get an e-mail account toreceive e-mail replies from prospec-tive employers.

Mike and Ephren plan to buildtheir business across the UnitedStates and even internationally, butthey aren’t losing sight of their origi-nal mission—to provide a service fortheir community.

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The U.S. economy includes thousands of small businesses. Manyof these small businesses are owned and operated by men andwomen who created their own companies. But what makes

someone an entrepreneur? What impact have entrepreneurs had inhistory, and today?

What Is an Entrepreneur?People who own, operate, and take the risk of a business venture

are called entrepreneurs. They are engaged in entrepreneurship,the process of running a business of one’s own. Entrepreneurs comefrom all types of backgrounds and create allkinds of businesses. All ages of peoplechoose to become entrepreneurs. Some owntiny craft shops, while others own huge con-struction companies. Entrepreneurs try toidentify the needs of the marketplace and tomeet those needs by supplying a service orproduct. When they succeed, their busi-nesses flourish, and the profits go to them.When they fail, their companies decline,and they may have to go out of business.

EMPLOYEES VS. ENTREPRENEURS Entrepreneurs assume risk. Thismakes them different from employees, who are people who workfor someone else. Both may make decisions, but only the entrepre-neur is directly affected by the consequences of those decisions. SamJones manages a record store owned by Felipe Santiago. Sam decidesto keep the store open until midnight during the week. If the addi-tional hours bring in customers and increase profits, Sam may bepraised by Felipe. He may even get a raise. However, Sam won’t di-rectly receive any of the profits because he is an employee. The earn-ings will flow to Felipe, the owner.

WHY DO PEOPLE BECOME ENTREPRENEURS? People go into business forthemselves for many reasons. Some want to leave the fast-paced cor-porate environment. Others want to be at home but still earn an in-

1.1Entrepreneurs: Present and Past

g o a l sDEFINE entrepreneurship.

LEARN about entrepreneurship in history.

IDENTIFY the impact of entrepreneurs and small business today.

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come. Others want to pursue a personal dream. The reason youmight become an entrepreneur may be completely different fromthese.

How are entrepreneurs different from employees?

Types of Entrepreneurial Businesses There are many opportunities for entrepreneurs in each

type of business. Manufacturing businesses actually producethe products they sell. Using resources and supplies, theycreate everything from automobiles to paper. Wholesal-ing businesses sell products to people other than the fi-nal customer. For example, a wholesaler supplies yourlocal greeting card store with items such as cards andwrapping paper. Retailing businesses sell products directly to the people who use or consume them. Service businesses sell services rather than products. They include hotels, hairdressers, and repair shops.

E n t r e p r e n e u r s : P r e s e n t a n d P a s t 1.1 5

In-Class ActivityGather in small groups. List advantages anddisadvantages of being anemployee. List advantages anddisadvantages of being anentrepreneur. Compare andcontrast the lists.

Manufacturing

Apparel andother textileproducts

Chemicals andrelated products

Electronics andother electricalequipment

Fabricated metal products

Food products

Industrial machinery and equipment

Printing and publishing

Rubber and miscellaneous plastic products

Stone, clay, andglass products

Wholesaling

Apparel

Electrical goods

Groceries and related products

Hardware, plumbing, heating equipment

Lumber, construction materials

Machinery, equipment, supplies

Motor vehicles,automotive equipment

Paper, paper products

Petroleum, petroleum products

Retailing

Auto and homesupply stores

Building materials andsupply stores

Clothing stores

Florists

Furniture stores

Gift, novelty, andsouvenir stores

Grocery stores

Hardware stores

Jewelry stores

Retail bakeries

Shoe stores

Sporting goodsand bicyclestores

Service

Appliance repair

Automotive repair

Babysitting

Bookkeeping

Consulting

Dance instruction

Electrical services

Exterminators

Flower decorating

House cleaning

Lawn care

Painting

Plumbing

Translating

Travel agency

Tutoring

Source: Small Business Administration

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OTHER BUSINESS AREAS Two other categories of businesses are (1)agricultural and (2) mining and extracting businesses. Agriculturalbusinesses generate fresh produce and other farm products, such aswheat. Mining and extracting businesses take resources like coal out ofthe ground so they can be consumed.

Describe different kinds of entrepreneurial businesses.

Entrepreneurs in U.S. HistoryDuring the colonial years, entrepreneurship flourished. Entre-

preneurs raised crops such as rice and tobacco. They also worked asbankers, merchants, silversmiths, and candlemakers, to name a fewcareer choices. After the American Revolution, the United States be-gan to industrialize. Entrepreneurs invented machines that increasedproductivity and helped the economy grow.

Entrepreneurs Who Changed America Entrepreneurs change American business decade after decade.

They establish huge companies or fill unmet needs. They constantlychange how things are done and contribute to the overall good of the nation. In each chapter, you will learn something about

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Entrepreneurialtimeline 1880 1900 1920 1940

Many entrepreneurs start by offeringsomething they themselves need. That’s ex-actly what made Madam C. J. Walker a mil-lionaire. Walker began making her ownhair treatments in 1904. The treatmentsworked well, so Walker began offeringthem to other African-American women.She sold her products door-to-door andbought ad space in newspapers. Walkerthen opened Lelia College, where she and

her daughter trained other women to useand sell the product line, which had ex-panded to include items such as complexionsoap and dental cream. At least 20 womencompleted the program every six weeks. Be-sides becoming a millionaire from the salesof her products, Walker made a huge con-tribution to the African-American commu-nity by empowering women to take pride intheir work.

The First Woman Millionaire

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entrepreneurs in history, because they are an important part of whatthe United States and the world have become today.

NINETEENTH-CENTURY ENTREPRENEURS A machine that put a majorboost in the U.S. economy was the reaper. In 1831, Cyrus McCormicktook the reaper, which had already been invented, and used it tomechanize the job of harvesting crops. McCormick had $60 when hewent to Chicago to set up a factory to manufacture reapers. In time,the company that marketed his reapers evolved into InternationalHarvester, which produced farm equipment for many years. Today,this company is called Navistar International Transportation Com-pany and manufactures International brand trucks.

Lydia Moss Bradley, an entrepreneur from Peoria, Illinois, mademillions of dollars in investments and real estate. She transformedseemingly unusable marshland into productive farm land. She alsofounded Bradley University in 1896.

John D. Rockefeller began working at the age of 16 as a clerk in asmall produce company. At 23, he had saved enough money to enterthe oil refinery business. By 1872, his company, Standard Oil,owned all of the main oil refineries in Cleveland, New York, Pitts-burgh, and Philadelphia. Before long, Rockefeller controlled almostall oil distribution in the United States. Eventually, he became therichest man in the world.

EARLY TWENTIETH-CENTURY ENTREPRENEURS Entrepreneurs re-mained very important in the twentieth century. For example,Henry Ford developed and mass-produced the Model-T auto-mobile, which he sold at a price many Americans could af-ford. A machinist from Detroit, Ford created one of thelargest companies in the world. Also during the early part ofthe century, Olive Ann Beech co-founded the Beech AircraftCompany with her husband. She had always handled the fi-nancial aspects of the company and took part in major com-pany decisions. She ran the business when her husbandbecame ill in 1940. With Beech at the helm, the companycontinued to be a leader in the aviation industry until merg-ing with the Raytheon Company in 1980.

Clarence Birdseye pioneered the development of packagedfrozen foods in the 1920s. His developments had a major impact on eating habits throughout the world. Rose Knox became anotherleader in the food industry when she took over the Knox GelatineCompany in 1908. Besides being an innovative business owner, shewas the first to provide employees paid sick and vacation leave and afive-day work week.

Name one historical entrepreneur and describe what he or she did.

E n t r e p r e n e u r s : P r e s e n t a n d P a s t 1.1 7

Henry Ford

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Entrepreneurs TodayMore than 5.8 million small businesses contribute billions of

dollars every year to the U.S. economy. These small companies employ more workers than all of the country’s large corporationscombined. Small businesses are found in virtually every sector of theeconomy. Companies such as Microsoft, Intel, and Apple all startedas small businesses. These companies have changed the workplaceby making computers accessible to the world. Other entrepreneurialcompanies include Southwest Airlines, Mrs. Fields Cookies, and Estée Lauder Cosmetics. These companies make life more pleasantfor consumers and provide employment to hundreds of thousandsof workers.

Small companies can be more creative and take more risks thanlarge companies. Their experimentation and innovation lead to tech-nological change and increased productivity. This makes small busi-ness a significant part of the American economy. For this reason,many experts believe that small companies will play an increasinglyimportant role in the future.

Why are small businesses so important to our economy?


ASSESSMENT 1.1

THINK CRITICALLY1. What are your reasons for wanting to become an entrepre-

neur? Do you think they are common to all entrepreneurs,or are some of your reasons unique?

2. What other entrepreneurs in the nineteenth or twentiethcentury have changed the American economy? How?

MAKE CONNECTIONS3. MATH Suppose there are exactly 5,812,000 small businesses

in the economy today. Approximately 27 percent of thosebusinesses are service businesses. What is the number of ser-vice businesses in the economy?

4. COMMUNICATION Clarence Birdseye developed the first packaged frozen foods. He greatly influenced eatinghabits in the United States and throughout the world. Writea short scenario describing a typical family’s daily eatinghabits at the end of the nineteenth century.

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Many people dream of running their own businesses. They would like to become entrepreneurs. Entrepreneurship can be exciting. But running your own business is difficult. In

fact, many companies started by entrepreneurs go out of business.This is often caused by poor planning, lack of business knowledge orentrepreneurial characteristics, or choosing the wrong business.

Characteristics of Successful EntrepreneursResearchers have identified several characteristics that distinguish

successful entrepreneurs from those that fail.1. Successful entrepreneurs are independent. They want to make

their own decisions and do something they enjoy.2. Successful entrepreneurs are self-confident. Entrepreneurs make

all the decisions. They must have the confidence to makechoices alone and bounce back from a poorly made decision.

3. Successful entrepreneurs have determination and perseverance.Entrepreneurs persist through hard times until goals are met.

4. Successful entrepreneurs are goal-oriented. They know what theywant, and they are able to focuson achieving it.

5. Successful entrepreneurs have a needto achieve and to set high standardsfor themselves. They are constantlysetting challenging new goals.

6. Successful entrepreneurs are cre-ative. They think of new ways tomarket their businesses and are al-ways looking for new solutions toproblems.

7. Successful entrepreneurs are able toact quickly. They are not afraid tomake quick decisions when nec-essary, which helps them beattheir competitors.

1.2Is Entrepreneurship

Right for You?

g o a l sIDENTIFY the characteristics ofsuccessful entrepreneurs.

ASSESS whether you have what it takes to succeed in your ownbusiness.

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Ryan Nelson has many entrepreneurial characteristics. Since hewas 14, Ryan played for his high school basketball team. Other boyshis height—just 5�8�—would not have enjoyed competing withmuch taller boys. Ryan accepted that he would have to work harderto win. He needed to be creative in handling the ball. Most of all, hehad to believe in himself. He did and became one of the top playerson his team. If Ryan opened his own business, the characteristics hedisplayed as a ball player might help him succeed.

Name three important characteristics of entrepreneurs.

Assess Your Suitability for EntrepreneurshipEntrepreneurship is not for everyone. Some people lack the quali-

ties needed to become successful entrepreneurs. Others lack the aptitude needed to run a business. For others, the benefits of entre-preneurship do not outweigh the disadvantages.

To determine if entrepreneurship is right for you, you first need to perform a self-assessment, an evaluation of your strengths andweaknesses. You can do this in a number of ways. You can list yourstrengths and weaknesses on a sheet of paper. You can ask otherswhat they believe your strengths are and where your weaknesses lie.There are also tests you can take to assess your abilities.

Assess Your InterestsSuccess as an entrepreneur requires a strong commitment to a

business and a lot of energy. To be able to commit yourself fully to abusiness, you should choose a field that interests you and that willprovide you with an experience you will enjoy.


The vast majority ofbusinesses in theUnited States are smallbusinesses that employ fewer than 20 people.

Number of employeesFewer than 20 20–499 500�

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Small Businesses Dominate the U.S. Economy

89%

10.7%

0.3%There are 9 millionwomen-ownedbusinesses in theUnited States. Thesebusinesses represent38 percent of theself-employed.

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HOBBIES AND INTERESTS Many entrepreneurs center abusiness on an interest or hobby. Tricia Johnson lovedreading mysteries and was interested in book collect-ing. Tricia created Royal Books, a company that buysand sells new, used, and rare books, especially mysterybooks. Making a list of hobbies and interests can helpyou decide what business is right for you.

PAST EXPERIENCES Analyzing past experiencesand jobs can help you decide on a businessyou would enjoy owning. Samantha Rodriguez worked as a customer service representative for a large company. Recognizing that she wanted a job where she could spend time outdoors,Sam formed her own bicycle messenger service. She now earns less money than she did as a customer service representative, but she enjoys the work that she is doing.

Name key factors that aid an entrepreneur’s commitment to a business.

Assess Your AptitudeDifferent jobs require different job aptitudes. Aptitude is the abil-

ity to learn a particular kind of job. Auto mechanics must possess anaptitude for solving mechanical problems. They also must be goodwith their hands. People who sell insurance must have good inter-personal skills. Answering questions like those in the Job AttributesChecklist can help you identify the kinds of entrepreneurial oppor-tunities that might match your aptitudes and interests.


JOB ATTRIBUTES CHECKLIST1. I enjoy working with numbers.2. I enjoy working outdoors.3. I enjoy working with my hands.4. I enjoy selling.5. I like working with people.6. I prefer to work alone.7. I like supervising other people.8. I like knowing exactly what it is I am supposed to do.

In-Class ActivityAs a class, suggest 10 possiblejobs for each item on the jobattributes checklist. Choosetwo people to write down allthe suggestions on thechalkboard or on paper.

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What does it mean to have an aptitude for something?

Assess the Advantages of EntrepreneurshipMany people see significant advantages in owning their own

businesses.1. Entrepreneurs are their own bosses. Nobody tells an entrepre-

neur what to do. Entrepreneurs control their own destinies.2. Entrepreneurs can choose a business that interests them. Entre-

preneurs work in fields that interest them. Many combine hob-bies and interests with business.

3. Entrepreneurs can be creative. Entrepreneurs are always imple-menting creative ideas they come up with themselves.

4. Entrepreneurs can make lots of money. Entrepreneurship in-volves risk. This means that entrepreneurs can make a lot ofmoney if their business succeeds.

The advantages of entrepreneurship are attractive to many people.However, it is still important to understand that not everyone is wellsuited to be an entrepreneur based on personal characteristics andaptitude.


Point your browser towww.ideas-in-action.swlearning.comComplete theactivity for Chapter 1.

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Assess the Disadvantages of EntrepreneurshipThere are also disadvantages to being an entrepreneur. They in-

clude the following:1. Entrepreneurship is risky. All small businesses face the possibil-

ity of going out of business or of losing money. 2. Entrepreneurs face uncertain and irregular incomes. Entrepre-

neurs may make money one month and lose money the next. 3. Entrepreneurs work long hours. Entrepreneurs never really are

finished with their jobs. They can work long, irregular hours.They receive no paid days off, and they may have to workevenings and weekends.

4. Entrepreneurs must make all decisions by themselves. Unlessthey have partners, entrepreneurs must make all the decisionsalone.

As the disadvantages show, entrepreneurship is not an easy en-deavor. If the business fails, the entrepreneur can lose his or her in-vestment and possibly more.

What are advantages and disadvantages of entrepreneurship?


“The thing you have toremember is that youcan’t blame anyone elsefor your mistakes.”

—Vinita Gupta, creator of Digital Link

ASSESSMENT 1.2

THINK CRITICALLY1. Entrepreneurs can fail even if they are committed and have

the characteristics needed to be successful. Why do youthink this can happen?

2. Why is it important for entrepreneurs to choose a field thatthey will enjoy?

3. Do you think the advantages of entrepreneurship outweighthe disadvantages? Why or why not?

MAKE CONNECTIONS4. MATH One in four small companies begun this year will be

out of business within the next two years. What percentageis this? Six years from now, nearly two-thirds of all busi-nesses started will no longer be open. What percentage isthis?

5. COMMUNICATION Rank the advantages of entrepre-neurship in order of importance to you. The item ranked“1” is most important to you, and the item ranked “4” is theleast important. Write a paragraph explaining your rankings.

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M illions of entrepreneurs in the United States start their ownbusinesses. How did they decide what businesses to operate?How can you learn about the business opportunities available

to you? What kinds of goals should you set for yourself?

Investigate OpportunitiesThe library has resources that can help

you examine different opportunities.These include books on entrepreneur-ship, magazines for entrepreneurs, trademagazines for certain businesses, andgovernment publications. County BusinessPatterns is an annual series of publica-tions providing economic profiles ofcounties, states, and the United States as a whole. Data include employment,payroll, and number of establishmentsby industry.

The library is not the only place to in-vestigate opportunities. The Small Busi-ness Administration (SBA) is anorganization that exists to help small businesses and their owners. Itpublishes information that may be helpful. Talking to entrepreneursand attending trade shows, which are special meetings where com-panies display their products, can also be beneficial.

Luanda Williams wanted to use her love of sports and dancing tocreate her own company. She found books and magazine articles atthe library that gave her information on various kinds of businesses.She also talked to owners of gymnastic centers, health clubs, anddance studios. Her research helped her come up with the idea ofopening a gymnastics and fitness center for children.

How can you find out about various business opportunities?

1.3Identify BusinessOpportunities and Set Goals

g o a l sRECOGNIZE different businesses youcould start.

IDENTIFY your own personal goals.

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Compare Different Opportunities Once you find some appealing businesses, you need to

identify which have the best chance for success. Now is thetime to assess each business idea by asking yourself thefollowing questions:

1. Is there a market in my community for this kind ofbusiness? Will people buy my product or service?

2. How much money would it take to start thisbusiness? Will I be able to borrow that muchmoney?

3. How many hours a week is it likely to take to run this business? Am I willing to commit that much time?

4. What are the particular risks associated with this business?What is the rate of business failure?

5. Does my background prepare me to run this kind of business? Do most people who own this kind of business have more experience than I do?

6. How much money could I make running this business?

What are some questions you need to ask to help determine ifthe business opportunities you listed are realistic?

Setting GoalsFor everything you do in life, you set goals. As an entrepreneur,

you will need to set financial and nonfinancial goals.

FINANCIAL GOALS Financial goals can include how much money youwill earn and how quickly you will pay off debts. Make sure yourgoals are realistic. They should be easily attainable. If one of yourfirst goals is to make lots of money early on, you almost certainlywill be disappointed. It usually takes time for businesses to be finan-cially viable. Most businesses begin operations by borrowing money.These debts usually are paid within one to five years. This meansthat at first, an entrepreneur may earn less than he or she wouldhave earned working as an employee.

Setting specific financial goals before starting a business can en-sure the business is able to earn the profits you want. Mo Yang wantsto start a mail-order business for model trains, planes, and cars. Heestimates that after expenses he would earn $9 for eachitem he sold. At this rate of profit, he would have to sell3,000 models to meet an income goal of $27,000 a year.This showed Mo that he would have to lower his in-come goal or find another business idea, because hewould probably not be able to sell that many models.

I d e n t i f y B u s i n e s s O p p o r t u n i t i e s a n d S e t G o a l s 1.3 15

In-Class ActivityIn small groups, brainstorm a list of resources for findinginformation about a company that sells automobileaccessories.

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NONFINANCIAL GOALS Mostpeople who own their ownbusinesses do so for morethan just monetary gain. Theyare looking for personal satis-faction. They may serve a com-munity need, do somethingthey like, or enjoy the personalindependence of being anentrepreneur. You will want tospecify what nonfinancialgoals you want to achieve bybeing an entrepreneur.

Mark and Cindy Baird ownOutdoor Exploration, a com-pany specializing in back-packing, white-water rafting,and mountaineering trips.


WHat WeNt WroNg?WHat WeNt WroNg?

Louise was an opera singer, but it wasn’ta financially viable career. She earned addi-tional money working at a copy shop in SanFrancisco. The elderly couple who ownedthe shop gave flexible hours to employeeswith aspiring music careers. Sadly, the hus-band died, and the wife decided to sell thebusiness and go to Cincinnati. Louisegrabbed the opportunity.

The former owner helped Louise gatherfinancial information and put together abusiness plan. Louise’s uncle co-signed on abank loan, and she was in business. Shemodernized the décor of the shop. Louisecontacted all the existing customers to as-sure equal or better service. Sales increasedthe first two months. But then...

The former owner left town earlier thanplanned. Then Louise’s chief printer quit. With the schedules of her part-time employ-ees, Louise was frantically trying to getlarge orders out on time. With no formalbusiness training and no management expe-rience, Louise couldn’t begin to deal withall these problems, problems even a veteranwould find difficult. She ended up sellingthe business at a $50,000 loss.

Think Critically1. What characteristics did Louise possess

that led her to become an entrepreneur?

2. What circumstances out of Louise’s con-trol led to the failure of this business?

Is Entrepreneurship Right for You?

Be Sharp or Fall FlatBusiness: Print Here!, San Francisco, CA * Open for business five months

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The Bairds had a dream to help disabled children experience the out-doors. Last year, they began offering inexpensive outdoor programs tochildren with Down’s syndrome and cerebral palsy. Mark and Cindyexperienced an enormous sense of satisfaction in seeing these chil-dren enjoy themselves outdoors.

Setting and meeting these types of nonfinancial goals can help anentrepreneur live a more satisfying and fulfilling life. Entrepreneur-ship can benefit many aspects of life.

Why are financial goals important? Name some nonfinancialgoals an entrepreneur may have.

I d e n t i f y B u s i n e s s O p p o r t u n i t i e s a n d S e t G o a l s 1.3 17

ASSESSMENT 1.3

THINK CRITICALLY1. Choose a business idea that appeals to you. For this business,

answer the six assessment questions listed in this lesson on asheet of paper. Is this a realistic choice for you? Why or whynot?

2. In terms of annual income, what financial goals have you setfor yourself for five years after you graduate? What nonfi-nancial goals have you set that becoming an entrepreneurcan help you achieve? Are financial or nonfinancial goalsmore important to you? Why?

MAKE CONNECTIONS3. MATH You live near the beach and have a passion for snor-

keling. Your dream is to give snorkeling lessons. You esti-mate that after expenses, you can earn $10 per lesson. Yourincome goal is $15,000 per year. How many lessons do youneed to give to achieve this goal? Is this goal realistic?

4. COMMUNICATION Write a letter to the Small Business Administration. In your letter, indicate your interest in start-ing a small business. Be specific about the type of businessyou wish to start. Ask what specific services the SBA providesto people who wish to start this type of business. Give yourletter to your teacher.

5. COMMUNICATION Make a list of personal nonfinancialgoals you would like to achieve through entrepreneurship.Choose one of these goals. Write an outline for a detailedplan you can follow to achieve this goal.

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CH A P T E R 1 AS S E S S M E N T

Entrepreneurs:Present

and Past

Is EntrepreneurshipRight for You?

Identify BusinessOpportunities and

Set Goals

18

1. An entrepreneur is a person who owns, operates, and takes the risksof a business venture. Entrepreneurs try to identify and meet a needfor a product or service.

2. Entrepreneurs come from all types of backgrounds, and they own allkinds of businesses including manufacturing, retailing, and servicebusinesses.

3. Throughout U.S. history, there have been many entrepreneurs whohave contributed to the economy.

4. Today, more than 5.8 million small companies still contribute greatlyto the U.S. economy.

5. Small businesses generally are more creative and willing to take risksthan large corporations.

6. There are a number of characteristics successful entrepreneurs pos-sess, such as independence and determination.

7. To determine whether entrepreneurship is for you, you will need toassess your strengths, weaknesses, interests, and aptitudes.

8. Advantages of owning your own business include being your ownboss and working in a field that interests you. Disadvantages includeuncertainty, risk, and the need to work very long hours.

9. There are many resources at your public library that can help you de-velop a list of business ideas. Trade shows can also give you valuableinformation.

10. Once you have identified several opportunities, ask yourself key ques-tions to analyze each option and identify the kind of business thatmakes the most sense for you.

11. Financial goals should include how much money you want to earnfrom your business. Setting specific financial goals will help you de-termine if your businesss idea will make the profits you want.

12. Nonfinancial goals can include serving a community need, workingat something you enjoy, or maintaining the independence that comeswith entrepreneurship.

W h a t d o y o u k n o w n o w?Read Ideas in Action on page 3 again. Then answer the questions a sec-ond time. How have your responses changed?

Chapter 1 S h o u l d Yo u B e c o m e a n E n t r e p r e n e u r ?

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Review Your Knowledge7. How are entrepreneurs different from employees?8. Why do some people go into business for themselves?9. Name all the different kinds of entrepreneurial businesses and de-

scribe what each produces.10. Name two early American entrepreneurs and what they did.11. Why are entrepreneurial companies important to our economy?12. What are the seven characteristics of successful entrepreneurs?13. Why is it important for a beginning entrepreneur to perform a

personal assessment?14. Why should entrepreneurs take past experiences into account when

deciding to start their own business?15. Why is it important to have an aptitude for the business you decide

to own?16. List the four advantages and four disadvantages of entrepreneurship.17. What resources can you use to research business opportunities?18. Why should you set both financial and nonfinancial goals for your-

self as an entrepreneur?

Chapter 1 Assessment 19

Choose the term that best fits the defini-tion. Write your answers on a separate sheetof paper.

1. People who work for someone else

2. Evaluation of your strengths and weaknesses

3. Special meeting at which companies display their products

4. People who own, operate, and take therisk of a business venture

5. The ability to learn a particular kind of job6. The process of running a business of one’s own

a. aptitude

b. employees

c. entrepreneurs

d. entrepreneurship

e. self-assessment

f. trade show

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Apply What You Learned

19. The six categories of privately owned businesses include manufactur-ing, agricultural, mining and extracting, retailing, wholesaling, andservice. In small groups, brainstorm specific industries and compa-nies that belong to each category of business. Make a list of industriesand companies for each type. Share your results with the class.

20. In groups, brainstorm a list of jobs that relate to each aptitude givenin Lesson 1.2. For each job listed, have members vote on which onesthey would like to do. Are there any jobs that received more votesthan the others? What are the aptitudes involved in these jobs? Shareyour results with the class.

THINK CRITICALLY21. How is entrepreneurship today different from entrepreneurship dur-

ing colonial times?22. What is the relationship between interest in and aptitude for a par-

ticular field? Can interests and aptitudes be the same? Why or whynot?

23. Other than going to the library and attending trade shows, can youthink of other ways to investigate business opportunities?

24. Why is setting realistic financial goals important to creating a success-ful company?

MAKE CONNECTIONS25. MATH Ellen Greenberg loves to make and fly kites. Ellen is planning

to open a shop selling custom-made kites. She asks for your advice tohelp her set financial goals. Ellen estimates that after expenses, shecan make a $15 profit on each kite she sells. If her annual incomegoal is $15,450, how many kites will she have to sell? Is this goal re-alistic?

26. RESEARCH Find information on the life and career of a famous his-torical entrepreneur. Find out information such as birthplace, thetype of business started, and what effect the person had on the econ-omy and history. Is the business still operating? Write a short reportabout your findings.

27. COMMUNICATION For the above Research question, find a creativeway to present your findings to the class. Use visual aids, skits, cos-tumes, games, etc.


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Chapter 1 Assessment 21

This activity will help you identify a business opportunity that maybe right for you. You will use this business idea for the “Build YourBusiness Plan Project” throughout the book.

1 Divide a sheet of paper into two columns. In the first columnlist all your interests. In the second column, list business oppor-tunities that relate to each interest.

2 Make a list of your strengths and weaknesses. Compare this listwith your list of business opportunities. For which business op-portunities would your strengths most apply? For which busi-ness opportunities would your weaknesses hurt the most?Based on your strengths and weaknesses, cross out those busi-ness opportunities that no longer seem suitable for you.

3 Assess your aptitude, using the checklist in Lesson 1.2. Put acheckmark next to the business opportunities that relate toyour aptitudes.

4 For the business opportunities remaining on your list, assess theadvantages and disadvantages of each. Cross out any whosedisadvantages outweigh its advantages.

5 Using the library or Internet, find and list sources of informa-tion that relate to the business opportunities that remain onyour list. Locate at least one of these sources for each businessopportunity and write a sentence stating the type of informa-tion available from it. On your list, cross out business opportu-nities for which you could not find any information.

6 Choose one of the business opportunities remaining on yourlist. Based on this business opportunity, answer the six CompareDifferent Opportunities questions listed in Lesson 1.3.

7 Set personal financial goals for a five-year period based on thebusiness opportunity you chose. Be realistic. Assume you willneed to borrow money to get started. Estimate both your in-come and expenses to determine the amount of profit you canexpect to make. Next, set nonfinancial goals you hope toachieve with this business. Be sure to include specific activitiesfor each goal.

PR

OJ

EC

T

BUILD YOUR

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Doughnuts as Wedding Cakes?

Vernon Rudolph started KrispyKreme Doughnuts in 1933 when

he bought a doughnut shop in Padu-cah, Kentucky, receiving, amongother things, the rights to a secretyeast-raised doughnut recipe.Rudolph and his partner movedKrispy Kreme operations to Nashville,Tennessee, where other Rudolphfamily members joined the business,opening shops in Atlanta, Georgia,and Charleston, West Virginia.

Krispy Kreme began as a deliv-ery business that sold doughnuts to local grocery stores. In 1937,Rudolph opened his own shop inWinston-Salem, North Carolina. Tostart it, he relied on two partners, a 1936 Pontiac, $200 in cash,doughnut-making equipment, thesecret recipe, and, most important,the name Krispy Kreme Doughnuts.

The first Krispy Kreme dough-nuts were made and sold on July 13,1937, at the Winston-Salem shop.Soon people began stopping to buyhot doughnuts. Demand was sogreat that Rudolph opened theshop for retail business by cutting ahole in the shop’s wall to sell thedoughnuts—the beginning ofKrispy Kreme’s window service.

Krispy Kreme is famous for itsfresh, glazed, yeast-raised doughnuts,the “Original Glazed.” Other prod-ucts include more than a dozen vari-eties of cake and yeast-raiseddoughnuts, real fruit pies, cinnamonbuns, and several snack foods.

Doughnut Wedding Cakes?InStyle Weddings may have jump-

started the trend of using KrispyKreme doughnuts as a wedding cake

to add an unusual touch to nuptials.The cakes have evolved from a simpletiered stack of doughnuts to creationsby cake decorators. Newlyweds aregiving guests doughnut gift packs,some with designer stickers with thecouple’s names on them. Neighbor-hood stores and corporate officeshave as many as 40 calls a week asthe wedding trend grows.

A Growing MarketThe grand opening of a Krispy

Kreme store attracts long lines ofpeople anticipating the delicious,warm doughnuts. Strict and consis-tent quality control contributes toKrispy Kreme’s huge success. All ofits doughnut mixes are made in amodern, state-of-the-art plant inWinston-Salem and are delivereddirectly by the company’s own fleetof trucks to Krispy Kreme stores.

The Krispy Kreme market isgrowing with developers who sharethe successful company’s vision,standards, and objectives. Buildingrelationships that have long-rangebenefits for area developers andthe business is the top goal forKrispy Kreme.

THINK CRITICALLY

1. What entrepreneurial characteris-tics did Vernon Rudolph possess?

2. List three factors that contrib-uted to Krispy Kreme’s success.

3. How is product diversification akey element in the success ofKrispy Kreme?

4. Invent one additional productmarketing idea for KrispyKreme doughnuts.

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FBLA Partnership with Business Project

www.fbla-pbl.org

Successful entrepreneurs under-stand the value of networking,

or establishing informal ties, withother leaders to develop opportuni-ties to grow the business.

FBLA understands the impor-tance of bringing business leadersand FBLA members togetherthrough innovative programs. This event recognizes FBLA chap-ters that develop and implementinnovative, creative, and effectivepartnerships to increase communi-cation and interaction with thebusiness community.

Your team (up to three mem-bers) will develop a business partner-ship project for your FBLA chapterand prepare a report including thesesections to highlight the project:

• Development (goals, planning,and roles of business and chap-ter FBLA leaders)

• Implementation (description of ac-tivities, level of involvement frombusiness leaders, roles of businessleaders and chapter members inimplementing the project)

• Degree of involvement (hoursspent, personal contact, and ex-ecutives and department headscontacted)

• Evidence of publicity (examplesof publicity and recognitionfrom the partnership)

The report should clearly andconcisely present the necessary in-formation. Your written report willbe evaluated for creativity, design,and graphics. It should use correctgrammar, punctuation, spelling,and acceptable business style.

Team members will give a two-minute oral abstract of their projectto the judges. Five points will bededucted for an oral presentationthat lasts more than two minutes.No visual aids or audiovisual equip-ment are allowed for the presenta-tion. The final score will be thetotal of the scores for the writtenreport and oral presentation.

Performance IndicatorsEvaluated• Describe the business partner-

ship thoroughly.

• Write an effective business re-port that summarizes partner-ship activities.

• Understand the importance ofnetworking with the businesscommunity.

• Demonstrate a high degree ofinvolvement by FBLA membersand business leaders.

• Present a written report usingappropriate format.

For more detailed informationabout performance indicators, goto the FBLA web site.

1. Why is it important to networkwith the business community?

2. Why is it necessary to have lead-ership in the FBLA chapter andfrom the business to carry outthe partnership project?

3. What are the long-term bene-fits from a partnership projectwith a business?

4. Why should an aspiring entre-preneur network with a currentbusiness leader?

23

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